What is an FHA loan?
An FHA loan is insured by the Federal Housing Administration (FHA) and issued by an FHA approved lender. These loans were made for low-to-moderate income consumers, and they offer options to borrowers with lower minimum down payments and lower credit scores. Many think FHA loans are just for first-time homebuyers, and while they are a great option for first-time homebuyers, they are also a good option for those without perfect credit or significant cash assets.
Who qualifies for FHA loans?
- Homebuyers with lower credit scores- min 550 credit score
- Minimum down payment of 3.5% of the purchase price
- Individuals with low-to moderate-incomes
- First time home-buyers
Benefits of an FHA loan:
- More flexible qualification requirements than other home loan types
- Down payments as low as 3.5%
- Lower credit score requirements
- Higher maximum debt-to-income ratios
- Less closing costs
FHA is a great option if you are a first time home buyer, have less than stellar credit, or not a lot of cash assets.